GBG Gindalbie Metals Ltd.

[macduffy]

I mentioned GBG in another connection this morning. As an emerging, significant iron ore producer it deserves its own thread. By coincidence, construction on its Karara project began officially today although preliminary work has been proceeding since final environmental approvals were received a few weeks ago.

;)

http://www.asx.com.au/asxpdf/20091130/pdf/31mdzbxtjkqpsz.pdf

Disc: Holding GBG.

[Dr_Who]

Thanks Mcduffy.

I ve also been keeping an eye on this one for ages. Do you have a valuation on GBG?

[macduffy]

Thanks Mcduffy.

I ve also been keeping an eye on this one for ages. Do you have a valuation on GBG?

RBS apparently have recently done a report on GBG but I havn't been able to access it.

Perhaps the best indication of value is still the 85cps that Ansteel paid about 12 months ago to increase their stake to 36%. That price was based on a report by Deloittes that arrived at a fair value in the range of 71c - $1.00.

[mark100]

UBS reckon $1.30 from memory. I have a few

[macduffy]

Almost a year since the last post on GBG so time for an update.

SP has increased about 50% since then to close at $1.26 yesterday, albeit with some pretty big fluctuations along the way.

The project is progressing according to plan with first ore to be mined mid 2011.

Here's the Chairman's address from the recent AGM.

http://www.asx.com.au/asxpdf/20101110/pdf/31tsk929qbbdd5.pdf

I'm holding.

[macduffy]

Here's today's corporate presentation.

http://asx.com.au/asxpdf/20110131/pdf/41wgpmw6r5jb5d.pdf

Note the various brokers' recommendations.

I hold a few.

[Toulouse - Luzern]

GBG is one on my picks in the ASX stock picking contest.
It is the only one of my 5 x picks at water level so far ...
The other 4 are under water just now...
With the AFC (Australian Flood Crisis) and EFC (Egyptian Financial Crisis) GBG is back at the 17 Dec 2010 price at 132.5.
GBG has been as high as 148.5.
The development looks to have upside ...

[Corporate]

Not much interest in GBG, although I noticed that a couple of people picked it in the ASX 2013 stock picking competition.

In terms of iron ore producers this is my pick:

Share price has been massively smashed leaving a market capitalisation of around $330m
Capital raising completed to enable ramp up of magnetite production
50% of 2mtpa of DSO + 8mtpa premium magnetite
Iron ore prices back up to 146/t for 63% fines
GBG magnetite will be sold at a premium (est 165/t based on current 63% fines price)
Cash costs $75/t
Life of mine sales agreement with Ansteel who owns 36% of GBG and is the 50% partner of the Karara project

Worth a look IMO


4257

[macduffy]

Yes, certainly worth a look, Corporate.

Iron ore prices have staged a remarkable recovery since the slump in September, up 25% in December alone. Aust miners' SP's havn't followed suit, yet!

http://www.theaustralian.com.au/business/markets/ore-price-extends-gains-on-china-rebound/story-e6frg91x-1226546282355

[macduffy]

And more good news for GBG as first shipment of magnetite from Karara makes its way to China.

http://www.afr.com/p/business/companies/gindalbie_makes_first_shipment_from_D2tZHA1fw6hFT2 vwA1B0kM

[Corporate]

Up 10% today which is nice! This is only the beginning IMO

[Corporate]

GBG now up to 31c and finally re-rating


The Australian
January 03, 2013

IRON ore miner Gindalbie Metals has shipped its first load of high-priced magnetite concentrate from Geraldton, sending its struggling share price surging on a combination of growing confidence about its $2.6 billion Karara project and rising iron ore prices.

The shipment, which is the first big shipment of magnetite concentrate out of Western Australia, gives confidence in Gindalbie's infrastructure and its ability to move decent quantities of concentrate.

Magnetite requires more processing than the direct shipping hematite ore mined by Rio Tinto and BHP Billiton, but its end product, which is of a higher grade, attracts a premium.

Gindalbie's product, which contains 68 per cent iron, sells at Chinese ports at a 20 per cent premium to the benchmark 62 per cent grade ore ore fines that this week hit an eight-month high of $US144.90 a tonne.

At those prices, which most in the market expect to be fairly short-lived, the miner is making a cash margin of close to $US90 a tonne.

Gindalbie's shares rose 2.5c yesterday to 27.5c on the good news out of the project, which has previously suffered delays and cost blowouts.

The shares are now the highest since late November, before a surprise equity raising and estimated operating cost overruns sent shares tumbling to a seven-year low of 22c.

But they are still only about half the price they were at the start of last year.

Managing director Tim Netscher said the company was on track to ramp up to production of eight million tonnes of magnetite concentrate a year by April '13

To do so, much of the plant, including three of four production lines, still needs to be started.

The magnetite will add to the current rate of two million tonnes a year of direct shipping hematite ore to probably make Gindalbie the nation's fourth-biggest iron ore exporter after Rio, BHP and Fortescue.

This will be short-lived, though, if steelmaker and miner Arrium can meet its target of reaching 11 million tonnes a year in June.

[Corporate]

I have moved my funds from GBG to AGO.

Main reason, I think the Karara JV is more risky due to the large amounts of debt and higher cash operating costs (although cash costs are offset by the premium price they will received over 63% FE).

I put AGO and GBG on about the same enterprise value. However, AGO is going to produce much more iron ore.

[Bobcat.]

I came in late yesterday on GBG. At 5.9c, I'm of the view that this stock is now oversold.

Iron Ore stockpiles in Chinese ports are still high but mainly because stockpiles in their factories have been massively reduced. IMO, the Chinese government's preoccupation with full employment at all costs will soon free up bank loans for its construction industry and revive demand for rebar, etc.
BC